Planet, People, and Profit: How Green Supply Chain Management Practices Drive Employee Work Engagement and Firm Performance

ABSTRACT Despite the widespread adoption of green supply chain management (GSCM) practices, existing research offers conflicting evidence regarding their impact on firm performance, highlighting the importance of investigating the underlying mechanisms that allow firms to fully capture the value of such investments. Moreover, prior studies have largely overlooked the influence of GSCM practices on employee work engagement, which may serve as critical mechanisms through which these practices translate into improved firm performance. To address this, this study examines the relationships between internal (i.e., internal environment management, eco‐design, and investment recovery) and external (i.e., green purchasing and customer collaboration) GSCM practices and firm operational performance and the mediating role of employees' work engagement. To this end, we employed a multi‐informant data collection design in which GSCM practices and firm operational performance were assessed by managers, while work engagement was captured directly from employees from the 121 surveyed manufacturing firms, thereby enhancing measurement accuracy and the overall roundness of the results. The analysis revealed that internal GSCM practices have a positive impact on firm operational performance, while external GSCM practices do not. Unexpectedly, we found that internal GSCM practices do not increase employees' work engagement, whilst external GSCM practices do. However, employees' work engagement fully mediates the relationship between external GSCM practices and firm operational performance. This study advances the literature by exploring the impact of GSCM on employee‐level outcome and explaining how it influences performance through driving employees' work engagement.